How can Lenders Mortgage Insurance benefit me?
Almost everyone wants to be able to buy a home sooner rather than later, however saving the typical 20% deposit can sometimes be a truly daunting prospect - and one that not a lot of borrowers can comfortably achieve by the time they wish to purchase.
Let's face it - with median house prices in Australia now above $600,000 saving a deposit of as much as $120,000 can be an impossible task.
By reducing the lender's risk at the outset, taking out Lenders Mortgage Insurance allows you to purchase your dream home with as little as 5% of the purchase price. This can open up many possibilities for you as a new homebuyer - better location, larger house, ability to do renovations - simply put, Lenders Mortgage Insurance brings you that much closer to achieving your homeownership dreams, years earlier than you ever thought possible.
Whether you are purchasing your own home or an investment property, using Lenders Mortgage Insurance can help you to achieve these goals much earlier and get you building your personal equity sooner.
Unlike traditional insurance products, there is a one-off premium payable for Lenders Mortgage Insurance. This premium is charged by the Lenders Mortgage Insurance provider to the lender, who typically passes this cost on to the borrower. The premium is payable when the loan funds are advanced and it provides cover for the full term of the loan.
The cost of Lenders Mortgage Insurance varies depending on a number of factors, including but not limited to; the amount of the loan, the level of your equity in the security property (how much of your own savings you contribute to the purchase) and the level of risk associated with the particular loan product you choose.
Some lenders will allow you to add the cost of the Lenders Mortgage Insurance premium on to your loan, meaning you will not have to pay this amount upfront. Your loan repayments will increase marginally to cover the cost of the Lenders Mortgage Insurance premium.